The Commissioner Of Income Taxtamil Nadu Vii, Chennai v. M/S.textile Dye-Chem Corporation

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 23.4.2019 CORAM THE HON'BLE DR.JUSTICE VINEET KOTHARIANDTHE HON'BLE MR.JUSTICE C.V.KARTHIKEYAN Tax Case Appeal No.1327 of 2009 The Commissioner of Income TaxTamil Nadu VII, Chennai ... Appellant Vs. M/s.Textile Dye-Chem Corporation,150, Montieth Road, Chennai 600 008.(PAN: AAAFTO387R)... Respondent Tax Case Appeal filed under Section 260A of the Income TaxAct, 1961 against the order of the Income Tax AppellateTribunal, Madras 'C' Bench, Chennai, dated 22.5.2009 made in ITANo.1728/Mds/2008, against the order dated 13/05/2018 made in ITA No.234/07-08on the file of the Commissioner of Income Tax (Appeals)-IX forthe Assessment Year 2004-05, against the order dated 28/12/2007 made in PAN/GIRNo. on the file of the Income Tax Officer, BusinessWars-VII(1), Chennai, for the Assessment Year 2004-05. For Appellant : Mr.M.Swaminathan Senior Standing Counsel assisted by Ms.S.Premalatha For Respondent : Mr.M.P.Senthilkumar assisted by Ms.Sree Lakshmi ValliJ U D G M E N T(Delivered by DR.VINEET KOTHARI,J) The Revenue has filed this Tax Case (Appeal) underSection 260-A of the Income Tax Act by raising the followingpurported substantial questions of law arising from the orderpassed by the Income Tax Appellate Tribunal dated 22.5.2009, by https://hcservices.ecourts.gov.in/hcservices/ which the learned Tribunal partly allowed the Appeal of theRevenue and upheld the order passed by the learned Commissionerof Income Tax (Appeals), wherein the learned Commissioner ofIncome Tax (Appeals) has directed for adopting the Gross ProfitRate of 7.37% for Assessment Year 2003-04 for best judgmentassessment:- "i) Whether, on the facts and in the circumstancesof the case, the Income Tax Appellate Tribunal wasright in law in holding, for estimating the profitson the basis of GP Rates for past years is valid,even though the Commissioner of Income Tax(Appeals) having agreed that the inflated purchasesare shown in the accounts only to reduce the actualprofits?ii) Whether, on the facts and in the circumstancesof the case, the Income Tax Appellate Tribunal wasright in law without considering the grounds raisedbefore the Income Tax Appellate Tribunal by way ofspecific grounds, which was supported byJurisdictional High Court Decision reported in 263ITR 5 is valid?" 2. The relevant portion of the order passed by theCommissioner of Income Tax (Appeals) is quoted below for readyreference:-"7. I have considered the assessment order, statementof facts and written submissions filed by the learnedAR of the appellant. I find that the appellant is notable to produce M/s.Parol Chemicals and M/s.JupiterChemicals. The appellant had not given full postaladdresses of these parties to the AO on the groundthat these parties has approached with the help ofthird party to the appellant. However, the appellanthas claimed that they have evidence to show that thosegoods have been sold. The learned AR of theappellant have also argued that the learned AO has notinvestigated the correctness of the sales. Thecontention of the learned AR of the appellant is thatif the AO is accepting the sales, she should alsoaccept the purchase. Without purchases, the salescannot be accepted. I find that the appellant has notpaid purchase amount to M/s.Parol Chemicals andM/s.Jupiter Chemicals on the ground that they have notreceived the full payment from the parties to whomgoods were sold. In the circumstances, I find thatsales are accepted but the genuineness of thepurchases is not verifiable because the appellant isnot able to furnish the postal address of the parties.The AO's observation is that the appellant hasinflated the purchases. If we consider this, I find In view of this, the AO is directed to adopt the GP of7.37% shown in assessment year 2003-04 for the yearunder appeal and accordingly calculate the GP." In view of this, the AO is directed to adopt the GP of7.37% shown in assessment year 2003-04 for the yearunder appeal and accordingly calculate the GP." 3. The observation made by the learned Tribunal is alsoquoted below for ready reference:-"6. We have considered the rival submissionscarefully in the light of the material on record.No doubt the burden is always on the Assessee toprove the expenditure which has been claimed bysuch Assessee, but at the same time if the saleshad been accounted for in the books thencorresponding expenditure on purchase cannot beignored merely because bills could not be producedfor which the Assessee seems to have givenjustifiable explanation." 4. Having heard the learned counsel appearing for theparties, we are of the clear opinion that no substantialquestion of law arises in this Appeal as the estimation ofincome of the Assessee at the GP rates is the best judgmentmethod usually adopted by the Authorities below when the booksof accounts are rejected which cannot be said to be perverse inany manner in the present case. 5. Therefore, in our opinion, the Appeal filed by theRevenue is devoid of merit and it deserves to be dismissed. https://hcservices.ecourts.gov.in/hcservices/ Accordingly, it is dismissed and the substantial questions oflaw, as framed earlier, are answered in favour of the Assesseeand against the Revenue. No costs. Sd/- Assistant Registrar //True Copy// Sub Assistant Registrarssk.To1. The Commissioner of Income Tax Tamil Nadu VII, Chennai 2. Income Tax Appellate Tribunal, Madras 'C' Bench, Chennai3. The Asst. Commissioner of Income Tax, Business Range - VII, Chennai.+1cc to Mr.M.Swaminathan, Advocate Sr.38523+1cc to Mr.Philip George, Advocate Sr.38577 TCA No.1327 of 2009rsv[]co]srg 20/06/2019